• by IPS Correspondents (caracas)
• Saturday, November 12, 1994
• Inter Press Service

CARACAS, Nov 12 (IPS) - The Venezuelan Financial Emergency Committee took control of the Andean Bank, a small regional entity unable to meet its 29.4 million dollar commitments to depositors, it was announced Saturday.

This is the twelfth bank the government has taken over as a result of the financial crisis.

Thirtyfive of the 47 commercial banks are now under state management, handling 53 percent of the assets which were under private bank control at the close of 1993.

The Andean bank, which mainly operates in the agricultural zone of the southeastern Andes, had been in difficulties for several weeks, unable to get necessary refinancing from foreign investments.

Finally, the Emergency Committee bought 73 percent of Andean Bank shares for a token sum, as they did with the Venezuelan and Consolidated Banks during the "third wave" of the banking crisis in August and September.

Venezuelan President Rafael Caldera declared an economic state of emergency on Jun. 27, imposing exchange and price controls and placing all banking action under the direction of the mainly governmental Emergency Committee.

In January, the Latino Bank - the second largest in the country - was declared bankrupt, reopening in April with 1.7 billion dollars of state aid, and in June eight small and medium- sized banks were closed after receiving 2.8 billion dollars of government assistance over the previous six months.

The state support, rather than putting the brakes on the crisis, actually promoted capital flight of between three and four billion dollars from the international reserves, which had stood at 12.6 billion dollars in Dec. 1993.

These two "waves" were followed by the takeover of the Venezuelan and Consolidated banks - among the country's six largest - giving the state 52 percent of national banking shares.

The economic crisis has thus far cost Venezuela six billion dollars, or some 12 percent of the Gross Domestic Product, and many leading bankers and economists are predicting that a "fourth wave" will hit before the end of the year.

Sources said this will occur due to several banks "temoraily afloat" because of excess liquidity in the economy, and some banks not observing the obligatory 25 point margin between active interests (those charged) and passive interests (those paid to savers).

The government expressed its intention to reprivatise all the banks it has acquired this year "as soon as possible," but no concrete agreements have yet been made.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service

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